2019 (2) TMI 1264 - AT - Income Tax

Addition made towards unexplained cash deposit made in the bank account - CIT-A deleted the addition and directing the ld. AO to add only commission @0.25%on the total transactions - HELD THAT - As find from the facts of the instant case, we deem it fit and appropriate, to remand the appeals to the file of AO for de novo adjudication with a direction to the assessee to co-operate with the ld. AO for presenting the true facts - the adjudication of commission percentage whether at 0.25% or 0.10%, becomes premature at this stage. Hence the cross objection preferred by the assessee is also remanded back to the file of AO. Since de novo adjudication of this entire issue is directed to the file of the ld. AO, the assessee is given full liberty to adduce fresh evidences, if any, in support of its contentions. Accordingly, grounds raised by the revenue in this regard and grounds raised by the assessee in cross objection in this regard are allowed for statistical purposes. Addition made towards unexplained liabilities in the form of share application money, sundry creditors - CIT(A) upheld this addition for want of evidences from the assessee - HELD THAT - It is not the caes of the revenue that these creditors, share application moneys were not received by cheques by the assessee company. Hence these transactions might even be credited in the bank account i.e. Royal Bank of Scotland which is directed hereinabove to be verified by the ld. AO afresh. Hence, we deem it fit and appropriate, in the interest of justice and fair play, to remand this issue also to the file of ld. AO for de novo adjudication in accordance with law.

Summary

Issues:
1. Justification of deletion of addition made towards unexplained cash deposit in the bank account of the assessee company.
2. Action of upholding the addition made towards unexplained liabilities in the form of share application money and sundry creditors for all three assessment years.

Analysis:

Issue 1:
The appeals by the Revenue and the Cross Objections by the assessee questioned the deletion of the addition towards unexplained cash deposit in the bank account of the assessee company. The ld. CIT(A) directed the ld. AO to add only a commission on the total transactions. The assessee, a private limited company, failed to provide evidence of filing the return of income originally. The ld. AO proceeded to treat the entire cash deposits in the bank account as unexplained. However, the ld. CIT(A) considered the company as an accommodation entry provider and directed to tax only the commission attributable to the deposits. The Tribunal found no effective representation by the assessee and remanded the case to the ld. AO for fresh adjudication, allowing the assessee to present true facts and fresh evidence.

Issue 2:
The second common issue was the action of upholding the addition made towards unexplained liabilities, including share application money and sundry creditors for all three assessment years. The ld. CIT(A) upheld the addition due to lack of cooperation and evidence from the assessee. The Tribunal decided to remand this issue to the ld. AO for fresh adjudication, giving the assessee the opportunity to provide new evidence. The grounds raised by the assessee in the cross objection were allowed for statistical purposes.

In conclusion, the appeals of the revenue and the cross objections of the assessee were allowed for statistical purposes, and the Tribunal ordered a fresh adjudication by the ld. AO for both issues.